Council approves outsourcing guidelines

San Diego city leaders completed the second of 10 conditions tied to Proposition D, a measure on the Nov. 2 ballot that would increase the city’s sales tax by a half-cent, when it adopted a guide Monday that sets the rules for potential outsourcing of city jobs.

Whether that guide leads to any future savings for taxpayers may not be known for years as it requires a labor-friendly council to oversee the competition as private companies bid against union workers for government jobs.

The guide, which passed on a 6-1 vote, ends a battle at City Hall over managed competition that began in 2006 when city voters approved Proposition C, which allowed competitive bidding for most services. The city struggled to reach agreement over the years with its labor unions on how to implement the competitions and negotiations bogged down.

The new agreement moved forward quickly after city leaders made the guide one of the conditions that must be completed before the city can collect a sales tax hike, if Proposition D is approved by voters. It requires private companies to provide savings of at least 10 percent compared with the bids submitted by city workers in order to qualify for selection. The deal doesn’t include any health care requirement for private bidders, a major concession by labor leaders.

Critics, including Councilman Carl DeMaio who voted against the guide, say the process is rigged to favor union workers and there is no guarantee of any savings. Specifically, they point to the extensive labor negotiations required throughout the bidding process and the ability for the council to squash any outside bid unilaterally.

“The city’s labor unions do not want to give up their monopoly at City Hall and this so-called deal guarantees that,” DeMaio said. “This managed competition guide effectively kills fair and open competitive bidding on city services.”

Council President Ben Hueso said he was saddened how much politics has infected the debate over managed competition but noted the guide gives voters what they wanted.

“They want to see competition on a level playing field and they want to see a process that’s going to create savings,” he said.

The Mayor’s Office has estimated a potential annual savings of $11 million to $27 million through competitive bids. Even if city workers win, they will likely identify cost savings.

One of biggest issues going forward will be the council’s willingness to outsource jobs even if a private company offers a better deal. At least three council members — Marti Emerald, Todd Gloria and Hueso — expressed doubts about managed competition during Monday’s hearing.

Councilman Kevin Faulconer, who opposed the guide, was out of town and didn’t vote.